Better Business - The FDA is increasing regulatory oversight as generic drugs gain importance in today's economy. The topic of generic drugs is becoming more important than ever, as patients who buy generics can save about 50 % in drug costs over a name brand drug with the same active pharmaceutical ingredient (API). Considering that generics account for nearly 70 % of prescribed medications and consumption is guaranteed to increase because of its lower cost, it's no surprise that governments are tightening regulatory oversight of drug manufacturers.

There is a direct correlation between the percentage of the world population using a product and the amount of regulatory oversight that comes with it. Widespread use necessitates careful quality control, especially when a product is developed using ingredients from a number of diverse sources.

The global regulatory landscape has permanently changed since the Heparin fiasco as the U.S. FDA has increased its vigilance and scrutiny of drug manufacturing operations in response to these regulatory incidents. Recent legislation has enabled the FDA to begin greatly increasing its ability for regulatory oversight, as evidenced by the recent openings of FDA bureaus in India, China, Europe and Central America, with plans to expand to Mexico, South America and the Middle East. The FDA Globalization Act of 2009, sponsored by Congressman John Dingell (Michigan) should be able to provide opportunities for more reform.

Despite the need for better drug regulation, still only 4 % of all abbreviated new drug applications (ANDAs) are approved by the FDA in their first go-round. 96 % of the disapproved ANDAs fail because of a lack of chemistry documentation. Considering that it takes an average of 18 to 24 months from submission to approval, it is imperative for drug manufacturers to learn how to get it right the very first time they submit an ANDA, i.e. having complete chemistry documentation, as per current FDA policy. To be sure, it can be quite frustrating to perform the necessary research needed to stay up-to-date with the FDA's increasingly strict requirements. The main problem with "meeting" FDA requirements is that, in many cases, it is very much like trying to hit a moving target, which is likely deliberately dynamic due to well-meaning legislation that steadily moves the drug industry towards general drug safety and efficacy.

The main source of the aforementioned lack of chemistry documentation, formally known on paper as "chemistry deficiencies", has been found to be closely associated with the drug manufacturers' source of API. Lack of transparency in the manufacturing process, response rate, quality, delays, unsecured supply chain, non-disclosure of solvents and toxic impurities are some of the more obvious reasons for chemistry deficiencies in ANDAs. The API and its source is heavily scrutinized by the FDA because an API is key to a drug's efficacy and in many cases, its overall safety. An API is a drug's foundation. ANDA submissions can be complex in that there are usually ingredients from multiple entities/sources in a single drug, and if one of those entities lacks sufficient documentation, especially the API source, the drug will likely be rejected and the ANDA disapproved. Thus, the key to ANDA approval is assure to that that the API is developed meticulously, and that all the development and manufacturing procedures strictly adhere to established quality standards and are documented precisely to comply with FDA and all other governing bodies when needed.

API Procurement

Before choosing an API source, there are certain factors that should be considered, including the geographic market breakdown of generic API sources. Currently, China, India and Italy account for the majority of the generic API manufacturers serving the world's estimated $17 billion market with China producing about 70 % of the world's generic API, India producing about 19 % and Italy producing about 9 %. Outside of geography, the criteria for choosing an API source should include a predictable response time, chemistry and manufacturing expertise, reliable quality, compliance assurance, regulatory expertise, intellectual property security, security of supply and language, especially with China's 70 % market share. Predictable response time is very important considering some of the more time sensitive aspects of ANDA approvals. Compliance assurance and regulatory expertise is key because it shows its ability to navigate current FDA policy and its overall knowledge of the approval process. Intellectual property security and security of supply indicate how organized the source is. But above all, an API source's track record is the litmus test for trust because a great establishment should routinely exceed the quality standards set forth by the FDA, which makes sense on many levels, financially, ethically and morally. It is not that the FDA sets a particularly low bar. It is that if a drug is manufactured to the highest of universal quality and safety standards, with painstaking effort, the drug will be safe and effective and is much more likely to be approved in its first approval cycle.

Which Route Suits Your Business?

After establishing the above parameters, there are a number of options available when determining the source of an API that have more to do with type of business model that is best suited for your goals. We will begin with the option of manufacturing the API yourself, or vertical integration. This option is, of course, ideal if you have the resources for a completely self-reliant business model where API production is possible, as well as having all the necessary equipment and staff in place. Immediately, it is advantageous to be fully in control with lower fixed costs, IP confidentiality and secure supply chains and logistics. However, the cost of infrastructure is very high, and if any capabilities are limited, or problems arise, there is no outside support. If the infrastructure does not exist or requires extensive renovation or modification to support API manufacture, the amount of time required to do so at this stage may jeopardize the entire program.

Another option would be to approach a lower cost manufacturer as your API source. This option is always risky because the quality and safety of the API can be called into question. Response time can be unpredictable, the quality of the production facilities can be questioned, supply chains and logistics are not secure: all things that can affect the ANDA approval process. IP confidentiality may not be guaranteed either. At the risk of sounding obvious, the other poor option would be to work with a competitor to develop the API. This is clearly a last resort, but there are rare situations where it is the only option available. Here, supply and logistics security and availability may be suitable for both parties, but costs may fluctuate depending on the specific business plan that is agreed upon by both sides. And there are clear competitive conflicts where transparency and confidentiality, especially in regards to each party's facilities and processes, can be a problem. Another potential pitfall can be long-term security of supply; will your newfound "frenemy" include your goals in their ongoing business plan?

If going with the lowest bidder sounds too risky and going to a competitor is out of the question, another option would be to build a partnership with a company that has expertise in API manufacturing in order to develop the drug together. This way, risk and responsibility are shared, but then, so is reward. A full service provider with an excellent track record is the ideal type of partnership because there is an assurance of quality, manufacturing experience, and regulatory expertise. The API may come at a premium, but all necessary documentation of the high quality and meticulous processes involved in making the drug are available, well organized, for the partner, and more importantly, for the FDA. With a reputable full service provider, the highest quality materials are guaranteed to be used in all processes, along with strict self-screening procedures that go over and beyond normal quality control practices done at lower cost manufacturers' facilities. All supply chains are secured, IP remains confidential, and response time is quick. In addition most full service providers have back office support capabilities that provide all required paperwork and support, that are especially invaluable when there is any last minute issue or follow-up work required for ANDA approval.
The reason a full service provider should consistently aim to exceed FDA standards is pretty simple: It makes sense to do everything possible to ensure a drug is approved, in financial terms, but also because it is in fact the right thing to do. If a drug is manufactured with the health of the end patient in mind, say a relative, the drug is more likely to be manufactured with the highest intentions and in the best conditions possible. Everybody wins when the bar is raised to the highest levels of quality and mutual respect.